Abstract
This study focuses on exploring the relationship between chief executive officer (CEO) duality and firm performance. We focus on how the size and corporate social responsibility (CSR) of firms moderate this relationship. In terms of size, business organizations are of two types: small and large firms. This study uses datasets of listed Chinese business firms included in the China Stock Market and Accounting Research database. It employs a generalized method of moment’s technique to explore the connection between CEO duality and the performance of Chinese business firms through double mediation effects. Our empirical analysis showed that CEO duality has a significant negative relationship with firm performance. We also explored the moderating effects of firm size (small and large) and CSR practices on the relationship between CEO duality and improved performance of Chinese firms. Large firms and CSR practices showed significant and positive moderating effects on the relationship between CEO duality and firm performance. Conversely, with CEO duality, small firms showed a negative moderating influence on firm performance. This inclusive model provides valuable insights into how the dual role of the CEO of a firm affected the performance of Chinese firms through the moderating role of CSR practices and firm size for better business performance. The study offers empirical and theoretical contributions to the corporate governance literature. This research framework might help researchers in designing robust strategies to evaluate the effects on firm performance. Researchers may gain helpful insights using this methodology.
Highlights
Chief executive officers’ dual roles (CEO duality) come from the board structure of leadership
The results of this study indicate that chief executive officer (CEO) duality influences the performance of Chinese firms through the moderating role of firm size
The study findings indicate that small firms have a significant and negative relationship with CEO duality and its impact on the performance of business firms, with performance measurements evidenced with return on investment (ROI) and return on equity (ROE)
Summary
Chief executive officers’ dual roles (CEO duality) come from the board structure of leadership. The positions of CEO (chief executive officer) and board chairman are combined into a single role (Barroso et al, 2011), counteracting the powers of the board of directors (Pérez-Calero et al, 2016). This role provides CEOs with additional capabilities and strengths (Rajan and Zingales, 1995) but results in mixed outcomes for organizations (Jensen and Murphy, 1990; Baker and Hall, 2004). While some studies assert that CEO duality can negatively impact firm performance (Moeller et al, 2004), others suggest no significant impact (Freeman et al, 2010; Abbas et al, 2019b), and others provide evidence of a positive association (Javeed and Lefen, 2019)
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